Charts I’m Watching: Nov 28, 2012

It’s pouring down rain on the normally sunny central California coast.  Even on days like this, it’s heaven on earth — unless you’re a line man for PG&E.  The high winds that accompany toad chokers around here are notorious for downing power and telephone lines — as just happened at my house.  I am now posting from my favorite coffee shop.  [correction: a Starbucks several miles away, as the two wonderful coffee shops near to my house have also lost their internet service.]

Speaking of storms…  This experience (and last week’s frantic search for bandwidth in SF) have left me woefully behind in charting. I need to invest some serious coin in backup power and communications.  So, I am leaving the Hurricane Sandy membership promotion up through December 1.

I’ve had a few questions about how this works.  Basically, a $100 contribution to the relief effort gets you a $200 discount off the price of an $800 annual membership or $100 off the price of a $475 six month membership. Just choose the charity, email me a copy of the receipt with your request, and I’ll send you an invoice for discounted subscription price.

If you already have a membership, I’ll extend it by the new period.  If you are one of the lucky initial Charter Members whose fixed rate is already lower than that, I’ll knock $100 off your rate for the next year.  Tempus fugits, folks.  Rates go up next week.

Also, thanks! for the many notes of support these past couple of days.  Thankfully, my wife and daughter are on the mend.  Things got a little hinky yesterday when their vision blurred and they were too dizzy to stand.  It wasn’t just the stomach flu I brought home from a business trip last week, but food poisoning from some broccoli that was a little past its prime.  Daughter #2 and I turned up our noses at it and, thus, remain unaffected (knocking furiously on the nearest wood with one hand, rubbing rabbit’s foot with the other.)

Last,a reminder that I will be tweeting any important intra-day updates (an email will still go out with each morning’s initial post.)  Sign up at  Any charts I post there are for public consumption, so feel free to share.


After some tense moments yesterday, we’re finally seeing the reversal we were expecting.  Having broken down from its rising wedge, SPX is well on its way to our downside target.  The first level of any real support is approaching at 1380-1384.

AAPL, the subject of a detailed analysis yesterday, has likewise broken down from its rising wedge, gapping down on the opening.

Note that SPX’s reversal came a couple of days later and a few points higher than we expected.  We remain short from 1404 on the 23rd.

UPDATE:  10:40 AM

We got a bounce off that white channel mid-line mentioned above, and have retraced about half the losses since the Nov 26 1409 high — back-testing the purple channel mid-line in the process. Corrective waves often retrace .500 — .886 of the previous move, so don’t be surprised if we push a little higher.

Just thinking out loud, but a reversal around 1400 would make for a pretty nice H&S pattern, which would likely target around 1357 — the .786 Fib of the 1343 to 1409 rally.

UPDATE:  2:45 PM

SPX has retraced almost 88.6% of its initial plunge (1406.32.)

The 60-min RSI we examined this morning has completed a back test of the recently broken purple channel and is bumping up against the mid-line of the longer-term yellow channel.  Next move should be to the bottom of the yellow channel (or even white.)

My lead scenario has this occurring around 2pm EST on Friday.  But, as we discussed yesterday, this move down is not a certainty. It’ll be important to see how the market reacts if/when it hits 1406.50 or so.

We saw today how the proper jawboning can snap markets out of a short-term funk (won’t solve any long-term problems.  But, since when do our elected officials concern themselves with the big picture?)

While I’m feeling feisty, remember that any “solution” TPTB comes up with will not fix America’s — let alone the world’s — balance sheet problems.  Too much debt = too much debt burden (interest) = too much money diverted from existing services = raising taxes and/or lowering services.

That’s right.  They can rearrange the chairs all they like, but none of the possible (let alone acceptable) solutions being discussed will make even a dime of existing debt go away.  At best, they might theoretically slow the rate at which debt accumulation is accelerating.

All the press conferences press releases disguised as WSJ analysis in the world won’t change that.  Yes, today’s double top was brought to you by Jonathon [Plunge Protection R Us] Hilsenrath.

UPDATE:  3:55 PM

Well, there’s a new interim high — on negative divergence from 5- 60-minutes and the daily charts (up to 53.346.)

Negative divergence is certainly no guaranty of a downturn.  Like yesterday, the risk remains that we don’t get a bigger downturn.  But, I still like the odds.  Watch your stops and trade safe.



Charts I’m Watching: Nov 28, 2012 — 9 Comments

  1. wow, today’s comments are not locked :P, anyway, not sure if anyone believe in its relevance to the market action, but tomorrow and Friday there is huge cash settlement of treasury purchases, meaning cash would be taken out of the market..
    I know I am not a sub, but according to your EUR projection of 1.21ish by end of year, that would really be negative for the market, wouldn’t it? 

  2. How does yesterday and today’s action map back to the analog we are following? I know the target is lower by end of week… seems like the mid-week retrace was much higher than anticipated. Wondering if we are on our way to 1424. 

    • I feel like I’m being subjected to one of Dr. Venkman’s ESP tests…

      I’ll map out the equivalent days on SPX and a couple of other indices later tonight.  It might be helpful to see the patterns side by side.

    • Yup, I’m with you.  Mildly short, but mostly cash again from about 1406.  Glad I cashed out this AM on the reversal.  That would have been painful to ride it down and ALL the way back up.  GLTA.

  3. Glad I set tight stops on 60% of my SPXU and loose stops on the 40% remaining.  Both got hit, but at least I booked a profit on the short side.  Booked my AAPL long at $582 early Tuesday on a trailing stop. Almost entirely cash in trading account.  Let’s see what kind of technicals we get from this bounce/IH&S push.

  4. Could this morning be a back test of the IHS showing on the 60 min (shoulder  11/9-11/13, shoulder 11/19-11/21)?